Winnipeg Free Press - PRINT EDITION

Disclosure law in name only

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A provincial ombudsman's office investigation into the financial management at Middlechurch Home of Winnipeg found the executive director directly involved herself in the hiring of her husband's and her brother-in-law's companies for renovations at the personal care home. The care home's board of directors, ombudsman Mel Holley found, was negligent in its duties to prevent such conflict of interest. The lack of oversight prompted the province to appoint an interim manager to get care home operations back on the rails.

The allegations of mismanagement and nepotism, most of which were born out by Holley's investigation and a separate audit by the Winnipeg Regional Health Authority, were made by a whistleblower, a Middlechurch employee.

The work done by relatives of executive director Laurie Kuivenhoven often was not open to tender. Some contracts were worth tens of thousands of dollars, but multiple invoices were written, sometimes dated the same day, so records would show work of less than $2,000. Work above that value required approval by Middlechurch's board of directors.

The board knew Kuivenhoven's relatives were getting repeat jobs at the home -- from 2007 on her husband's company submitted 217 invoices for payment, for a total of $435,572; her brother-in-law's company submitted 74 for a total of $98,406 -- but apparently were unaware she owned 50 per cent of her husband's company.

Mr. Holley found the executive director deliberately involved herself in the contracting, including instances in which tenders were called, and chaired a committee that assembled the costs and obtained quotes.

Middlechurch management said invoices were split into smaller parts so the care home could manage deficits, spread expenses out over the months. It said this is common practice at care homes.

Most people could recognize how the executive director's involvement in the hiring of her relatives' companies would run afoul of conflict-of-interest codes. Both Middlechurch and the WRHA's policies expressly forbid this, but it was accepted that when something needed to be fixed at the home, the husband's company was the go-to option. Middlechurch stated the company often did jobs for no, or low, cost.

Equally disconcerting was the fact senior staff was unaware of the conflict policies. This is a recurring theme among boards attached to non-profit entities that receive public funds. Other investigations have found that, for example, directors responsible for overseeing child welfare agencies have demonstrated similar naivety.

The WRHA should do spot audits of the financial management and contracting practices at other health-care agencies operating on public funds. The lack of awareness of conflict-of-interest codes clearly shows efforts must be redoubled to educate agency staff about the rights and wrongs of spending public money.

In fact, what went wrong at Middlechurch could serve as a cautionary warning to all those in position of spending taxpayers' money. Health Minister Theresa Oswald did some of that in announcing Middlechurch would be under an interim manager.

The ombudsman's office, though, is central to the education process and to raising the bar of good management. But, by practice, it does not release its whistleblower investigation reports. It must send a copy of its findings to parties involved, but the Public Interest Disclosure Act does not compel it to publicly post the findings.

This is a real hole in the legislation, a missed opportunity to further encourage strong financial management on publicly funded bodies. It also means the public is not given its chance to review the ombudsman's own work in investigating some serious allegations. The Selinger government must amend the act to correct this oversight.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition November 5, 2012 A10

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